Asia FX Gains on Weak Dollar Ahead of Trump Inauguration, BoJ Rate Decision Looms Investing.com

Investing.com–Most Asian currencies rose on Monday as the dollar weakened ahead of the inauguration of U.S. President-elect Donald Trump, while China’s central bank kept its benchmark lending rate unchanged to support the yuan.

Regional currencies made modest gains as markets remained cautious ahead of Trump’s inauguration in anticipation of additional tariffs on Chinese exports. This could trigger a trade war and affect most Asian economies based on trade.

It was 0.3% lower during Asian trade, retreating from a 26-month high reached last week. The greenback has held steady at a two-year high since the Federal Reserve turned hawkish last month.

It was down 0.3 percent.

The Chinese yuan was largely muted as the PBOC held its key lending rates

The Chinese yuan onshore pair added 0.1% while the onshore pair gained 0.2%.

The Chinese yuan traded in a narrow range on Monday, largely reflecting the People’s Bank of China’s decision to keep interest rates on hold.

The PBOC kept its one-year rate unchanged at 3.1%, the benchmark used to set mortgage rates, at 3.60%.

The move, aimed at supporting the weakening yuan, sustaining cash flows and supporting an economic recovery, did not bring market sentiment to the currency.

Japan, Malaysia interest rate decision awaited.

The Japanese yen pair fell 0.3% as markets priced in interest rate hikes later this week.

The BOJ is expected to raise interest rates next week as long as there is no market disruption following Trump’s inauguration. The central bank may reiterate its commitment to further rate hikes if the economy continues to recover, Reuters reported on Friday, citing sources familiar with the matter.

The Malaysian ringgit pair ended 0.1% lower. BNM is expected to hold rates at 3.00% for the 10th straight session on Wednesday due to strong economic growth and controlled inflation, according to a Reuters poll.

Elsewhere, the Australian dollar was 0.2% higher and the Singapore dollar pair was down 0.3%.

The Thai baht pair was largely unchanged, while the Indian rupee pair was down 0.1 percent.

South Korea’s winning pair fell 0.4% amid the country’s ongoing political crisis.